SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Economic Growth
Perfect competition
Normal Goods
Marginal Product of Labor (MPL)
2. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Spillover costs
Monopolistic competition
Incidence of Tax
Oligopoly
3. The total quantity - or total output of a good produced at each quantity of labor employed
Marginal Resource Cost (MRC)
Marginal Revenue Product (MRP)
Total Product of Labor (TPL)
Profit Maximizing Resource Employment
4. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Market Equilibrium
Price elastic demand
Necessity
Relative Prices
5. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power
Allocative Efficiency
Determinants of elasticity
Monopoly
Price elasticity
6. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Consumer surplus
Substitution Effect
Diseconomies of Scale
Perfectly inelastic
7. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Cross-Price Elasticity of Demand
Monopolistic competition long-run equilibrium
Demand for Labor
Law of Demand
8. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Spillover costs
Normal Profit
Necessity
Marginal Revenue Product (MRP)
9. The mechanism for combining production resources - with existing technology - into finished goods and services
Total variable costs (TVC)
Necessity
Resources
Production function
10. All firms maximize profit by producing where MR = MC
Dead Weight Loss
Oligopoly
Substitute Goods
Profit Maximizing Rule
11. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Specialization
Normal Goods
Implicit costs
Producer surplus
12. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Long Run
Production function
Total Product of Labor (TPL)
Unit elastic demand
13. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Perfect competition
Market power
Fixed inputs
Producer surplus
14. TR = P * Qd
Average Total Cost (ATC)
Total Revenue
Monopolistic competition long-run equilibrium
Decreasing Cost industry
15. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Demand for Labor
Scarcity
Price Elasticity of Supply
Shutdown Point
16. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Consumer surplus
Perfectly competitive long-run equilibrium
Negative externality
Marginal Revenue Product (MRP)
17. ATC = TC/Q = AFC + AVC
Excise Tax
Average Total Cost (ATC)
Monopolistic competition
Determinants of Labor Demand
18. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Spillover benefits
Marginal Resource Cost (MRC)
Monopolistic competition
Law of Supply
19. Costs that change with the level of output. If output is zero - so are TVCs.
Variable inputs
Total variable costs (TVC)
Cartel
Profit Maximizing Rule
20. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Shortage
Non-collusive oligopoly
Law of Increasing Costs
Opportunity Cost
21. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Perfectly elastic
Specialization
Shutdown Point
22. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Economy (Capitalism)
Perfect competition
Monopsonist
Income Elasticity
23. Exists at the point where the quantity supplied equals the quantity demanded
Income Elasticity
Market Equilibrium
Unit elastic demand
Demand for Labor
24. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus
Marginal Cost (MC)
Price floor
Inferior Goods
Monopsonist
25. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Law of Increasing Costs
Monopoly long-run equilibrium
Spillover benefits
Law of Diminishing Marginal Utility
26. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Spillover benefits
Absolute Advantage
Income Effect
Short run
27. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Surplus
Luxury
Profit Maximizing Rule
Variable inputs
28. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Surplus
Marginal tax rate
Total Fixed Costs (TFC)
Shortage
29. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Inferior Goods
Profit Maximizing Resource Employment
Substitution Effect
Marginal Benefit (MB)
30. Ei = (%dQd good X)/(%d Income)
Total Welfare
Economies of Scale
Income Elasticity
Monopolistic competition long-run equilibrium
31. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Total Welfare
Income Elasticity
Decreasing Cost industry
Economics
32. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Economics
Excess Capacity
Shortage
Surplus
33. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Free-Rider Problem
Resources
Constant Returns to Scale
Monopoly
34. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Producer surplus
Scarcity
Marginal tax rate
Average Total Cost (ATC)
35. A firm that has market power in the factor market (a wage-setter)
Monopsonist
Economies of Scale
Cartel
Monopolistic competition
36. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Positive externality
Scarcity
Explicit costs
Income Effect
37. Models where firms agree to mutually improve their situation
Market Equilibrium
Diseconomies of Scale
Necessity
Collusive oligopoly
38. Exists if a producer can produce more of a good than all other producers
Marginal Productivity Theory
Economics
Absolute Advantage
Determinants of Demand
39. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Monopolistic competition long-run equilibrium
Public goods
Necessity
Free-Rider Problem
40. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Positive externality
Utility Maximizing Rule
Oligopoly
Marginal Product of Labor (MPL)
41. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Positive externality
Monopolistic competition long-run equilibrium
Dead Weight Loss
Law of Supply
42. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Total Product of Labor (TPL)
Positive externality
Collusive oligopoly
43. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Increasing Cost Industry
Profit Maximizing Resource Employment
Production function
Spillover costs
44. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Average Variable Cost (AVC)
Monopolistic competition long-run equilibrium
Private goods
Marginal Benefit (MB)
45. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Cross-Price Elasticity of Demand
Law of Diminishing Marginal Utility
Price Ceiling
Positive externality
46. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Law of Increasing Costs
Economic Growth
Law of Supply
Least-Cost Rule
47. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Opportunity Cost
Utility Maximizing Rule
Marginal Benefit (MB)
Comparative Advantage
48. Ed < 1
Price inelastic demand
Constant Returns to Scale
Economics
Law of Demand
49. Entry of new firms shifts the cost curves for all firms downward
Decreasing Cost industry
Perfectly inelastic
Explicit costs
Marginal Product of Labor (MPL)
50. AFC = TFC/Q
Average Fixed Cost (AFC)
Subsidy
Incidence of Tax
Economics